Heathrow Sees Further Air Cargo Growth in March 2017

Fresh figures indicate that British-based air hubs are seeing their air freight rates climb right now, with Heathrow leading the charge. Ignazio Coraci comments on Heathrow’s continued growth.

Prosperous airport

Heathrow is the main gateway into the thriving London economy, and as this is one of the most prosperous cities on earth, it is a major hub for global air-cargo carriers. Companies such as ASC Cargo, which is based in Heathrow, transport goods all over the world, from the US to Hong Kong, from the hub and with e-commerce driving air cargo volumes, the airport is seeing strong freight growth.

The airport’s air freight volumes reached new heights in 2016, with its cargo shipments growing at a faster pace than its passenger expansion. This growth continued during the first few months of 2017, as figures indicate Heathrow’s air cargo volumes expanded by a further 4% during February this year, ensuring that the London-based airport got off to a “flying start” across the opening period of 2017.

Continued growth

ignazio coraci heathrowAccording to Air Cargo News, an industry portal, Heathrow registered more impressive growth in March 2017. The airport has released figures showing that it racked up its most impressive monthly expansion rate ever in March 2017, with its air cargo volume growing by 13%, to hit 148,000 tonnes. The main driver of this growth was long-haul markets such as Mexico (+28%) and Brazil (+13%).

Other key long-haul destinations for Heathrow in March included India (+9%) and China (+5%), while it also saw “impressive growth” for air cargo volumes in the Indonesian market. Expanding, a Heathrow spokesperson said that some lucrative new routes will be launched from the London-based airport this year, suggesting that Heathrow will see continued growth throughout the rest of 2017.

Prime air hub

In terms of total volumes, Heathrow is still the biggest air freight hub in the UK by a long way. However, Manchester airport saw a slightly larger rate of monthly growth in March, with its air cargo volumes expanding by 14.9% to reach just under 10,000 tonnes, due mainly to the hub’s increased long-haul capacity. No other British airport came close to recording this kind of growth in March 2017, however.

Statistics indicate that across March 2017, Heathrow’s rival Stanstead – another airport based in London, saw its air freight volumes climb by 10.2%, reaching 24,250 tonnes. Meanwhile the East Midlands airport’s air cargo volumes picked up by 5.5%, coming in at 30,300 tonnes shipped, in March 2017, proving that Heathrow is the most important air freight hub throughout the whole UK.

Expert commentary

Speaking out on this news, Ignazio Coraci noted: “It is clear that Heathrow is set to see a successful 2017, as it has posted impressive air cargo growth figures for the first three months of this year now. Cementing its status as the primary air freight hub in the UK, Heathrow should provide carriers with amazing new growth opportunities in 2017, strengthening the sector so it expands in future.”

Growth of Global Middle Class to Benefit Air Cargo

Figures indicate that globally, the middle class is larger than previously thought. Ignazio Coraci explains why the expanding international middle class could prove a valuable asset to the air cargo sector.

Driving trade

The global air freight sector depends on international trade to drive revenue, as when consumers buy goods from other countries, they generate business for the industry. Cross-border e-commerce is a particularly strong driver of air-freight growth, as it creates robust demand for air cargo services, and with this sector due to record strong long-term growth, the future looks bright for air freight firms.

The middle class, meanwhile, serves as the engine of the global economy, driving trade forward. These consumers have enough disposable income to execute big-ticket transactions on regularly, while the middle class is sizeable enough to ensure that they generate serious revenue for businesses. It is key that we have a strong middle class to spur global economic growth, and this appears to be the case.

Ignazio coraci air cargoGrowing middle class

The global middle class was estimated to measure 3.2 billion people – around half the world’s population, in 2016. But according to Global Trade Mag, an industry publication, this could be inaccurate. A paper published by Homi Kharas, a Senior Fellow at research group The Brookings Institution, suggests that the middle class could be up to 500 million larger than previously thought.

The Senior Fellow decided to re-visit his middle class calculations, due to four important developments. First, a poll of purchasing power parity prices has drastically changed, providing an improved understanding of relative economic strength. Also gross domestic product (GDP) data has improved, weakness in global economic growth has continued, and there are now new polls which provide a greater understanding of income distribution, leading to the change in middle class figures.

Moving into the future

By re-examining these factors, Homi gleaned some interesting insights. The Senior Fellow noted that Asian and African countries “were estimated to be far richer, compared to other countries, than previously imagined… Asian households in particular, are now thought to be much richer, relatively speaking, than before.” The research also showed how the global middle class will grow in future.

According to the study, the middle class is estimated to expand by 0.5% to 1% annually in advanced economies, but by 6% per year in emerging economies. Continuing, Homi wrote in the report: “Within a few years… based on current forecasts, a majority of the world’s population could have middle-class or rich lifestyles for the first time ever,” as middle class growth accelerates in the next decade.

Benefitting air cargo

Commenting on these findings, Ignazio Coraci said: “The projected growth of the global middle class during the next decade could prove beneficial to the air cargo industry. It will hopefully provide carriers with a lot of new business, especially as international e-commerce growth picks up steam, allowing them to rack up more revenue and chart a brighter future across the next ten years.”

Malpensa Airport to See Strong Growth in 2017

New reports indicate that Milan’s Malpensa airport saw strong air cargo growth in early 2017, and this momentum is only set to pick up further throughout the rest of the year. Ignazio Coraci comments.

Base of operations

Malpensa is the most strategically placed airport in Southern Europe. It is located in Lombardy, which is the richest region in Italy and a key driver of its economy, providing a multitude of opportunities for air cargo firms. Malpensa is also the only Southern-European hub to be ranked among the top 10 European cargo airports, making it very attractive for carriers who wish to serve this profitable market.

Malpensa airport also serves as our base of operations here at SW Italia. From Malpensa, we provide all-cargo services around the world, flying to far-flung destinations such as Azerbaijan, China and the US. We have quickly established ourselves as one of Italy’s leading all-cargo services, partly due to this advantageous location, and we are now expanding our fleet, to grow our company further.

Malpensa growth

There is a lot of potential to be found at Malpensa airport. Figures quoted by Air Cargo Week, an industry publication, suggest that for the past three years, the amount of air freight which passed through Malpensa grew at an average of 8%. But Malpensa’s air freight volumes expanded by a staggering 13% in the opening two months of 2017, showing that business is booming at the airport.

Meanwhile, this data suggests that in 2016, Malpensa’s air freight volumes rose by 7.4%. The airport’s air cargo volumes kept rising in early 2017 due to a stable economy, robust imports and exports and recovering road feeder service volumes. Experts believe that these same factors will ensure that Malpensa’s air freight volumes keep growing during the rest of the year, benefitting air cargo firms.

Contributing factors

There are various factors, which have attributed to the recent growth of Malpensa’s air freight numbers. The airport has long-been as a hub for the transport of goods such as pharmaceuticals, clothes, machinery, sports cars and perishables e.g. wine. Some of these, most notably pharmaceuticals, are seeing rapid growth, and coupled with the rising number of both small and heavy packages that are being transported from the hub, this is helping grow Malpensa’s air cargo volumes.

ignazio coraci looks at growth at Malpensa AirportWe should also not that Asia and the US – which is set to see robust air cargo growth long-term, account for over 70% of exports from Milan. Due to the recovery of import flows and increasing capacity of both direct and indirect services, the US market was a practically prominent driver of Malpensa’s growth in 2016. Meanwhile, Malpensa-based carriers are increasingly targeting new markets, such as South America, and this could boost the airport’s fortunes further going forward.

It is particularly interesting to note that Italy is only set to experience modest economic growth over the next few years, as it is not viewed by foreign companies as an easy place to do business. However in spite of this, Malpensa airport is expected to post further air cargo increases, in part because e-rising commerce is creating a climbing, constant stream of traffic for couriers based at the airport.

New opportunities

Commenting on these figures, Ignazio said: “Our location has allowed us to turn SW Italia into one of Italy’s leading all-cargo services. As Malpensa airport fulfils its potential and sees its air cargo volumes expand further in 2017, there will be new opportunities for us to capitalise on, allowing SW Italia to grow its operations and launch services to new markets, so we can thrive going forward.”

Air Freight Grows Significantly in Miami

Ignazio Coraci comments on recently-released figures, which indicate that during the past year, air cargo traffic volumes grew significantly in the US port city of Miami.

Amazing opportunities

There is amazing potential to be found in the US air cargo sector. A study published by the US’ Federal Aviation Administration (FAA) projected that in terms of RTMS, total American air freight traffic for domestic and global routes will climb by 1.4% during 2017. Meanwhile, the FAA forecast that total US air freight RTMs will grow on average by 3.1% per annum between 2017 and 2037.

It appears as though a fair share of this potential lies in Miami – a city located on the sea-coast of Florida, one of the US’ most populous states. Miami is a centre of business, finance, commerce and pharmaceuticals, while its location makes the city one of the primary entry points into the lucrative US market. These factors are making Miami an increasingly attractive destination for air cargo firms.

Booming air cargo

According to Freight Week, an industry publication, the city’s rising status as an air cargo hub, is leading to a rise in air cargo rates for its Miami International Airport (MIA). The US’ Department of Commerce recently revealed that the value of air cargo which passed through the hub increased by 8% during the previous year, to reach US$5.3 billion, showing that Miami’s fortunes are rising.

ignazio coraci looks at growth at miami airportIt is important to note that for a decade, Florida has ranked as the US’ fourth largest state in terms of gross domestic product (GDP).  It held this position in 2005, when the state’s GDP was US$700.3 billion and it retained this ranking in 2015, with a state GDP of US$888.1 billion. This has benefitted Miami’s air cargo industry, which accounted for a colossal 92% of Florida’s total air trade value in 2016.

Stronger prospects

Commenting on this news Carlos Gimenez, the Mayor of Miami-Dade County, where the city is located, said: “MIA’s continued growth means a stronger economy and more job creation for our community… That’s something each of our [county’s] 2.7 million residents can be proud of.” Data also shows that the lion’s share of MIA’s air cargo growth can be attributed to pharmaceuticals.

Between 2011 and 2016, MIA’s air cargo rates for pharmaceuticals jumped by 140%, with a rise of 48% registered in the past year alone, to reach US$4.4 billion by the close of last year. Expanding, Miami-Dade Aviation Director Emilio González argued: “Our efforts to maximize pharma freight traffic at MIA continue to pay dividends for Miami-Dade County, the state and the nation… The World Health Organization projects that the global pharma industry will rise in value from US$300 billion to US$400 billion within the next three years, and we want to position MIA at the centre of that growth trend.”

Tapping US markets

Speaking out on this news, Ignazio noted: “We can see, from the release of these figures, that along with other East-Coast locations such as New York, Miami is set to be a prosperous market for air cargo firms going forward. At SW Italia we are looking to tap into the lucrative US market, by developing a Milan to Chicago service and we may expand to East-Coast locations as time passes, so we can harness the potential to be found in the US, and build a booming international all-cargo operation in future.”

Global Air Cargo Demand Climbs in February 2017

New data has recently come to light, which illustrated that global demand for air cargo climbed at a phenomenal pace during the second month of 2017. Ignazio Coraci gives his take on these figures.

Changing fortunes

2016 was a challenging year for businesses. An uncertain geo-political climate, with events such as Brexit damaging investor sentiment, coupled with a slowing Chinese economy to ensure that 2016 only saw moderate trade growth. This inevitably had an impact on the fortunes of the global air cargo sector, which depend upon trade to thrive, ensuring it too only recorded moderate growth last year.

But the fortunes of the worldwide air cargo sector are changing this year. Despite the fact that January is a traditionally bad time for the sector, air cargo volumes expanded on some key routes during the opening month of the year. On the Hong Kong/US and Hong Kong/Europe routes, for example, air freight rates were 9.1% and 6.5% higher respectively in January 2017, than they were in January 2016.

Strong demand

Figures released by the International Air Transport Association (IATA) indicates that the global air cargo industry kept growing in February 2017, according to Airport Technology, an aviation sector news hub. The IATA notes that worldwide, demand for air freight climbed by 12% – way higher than the five year monthly average of 3%, in terms of freight tonne kilometres (FTKs) in this month.

Commenting, IATA Director General Alexandre de Juniac noted: “February further added to the cautious optimism building in air cargo markets. Demand grew by 12% in February—about four times the five-year average rate. With demand growing faster than capacity, yields got a boost. While there are signs of stronger world trade, concerns over the current protectionist rhetoric are still very real.”

Further progress

The organisation also found that when compared to February 2016, demand for global air freight ticked up by 8.4%. The IATA further noted that when measured in available freight tonne kilometres (AFTKs), the capacity of the worldwide air freight industry dropped by 0.4% in February 2017, while there was also a slight uptick in global trade volumes, which correlated with the air cargo demand rise.

Turning his attention to the air cargo market’s future prospects, Alexandre said: “Any optimistic look at the future sees growing demand for specialised value added services. Shippers are telling us that the key to turning the current uptick in the cargo industry’s fortunes into longer-term growth is modernising our antiquated processes. We must use the current momentum to push ahead with the elements of the e-cargo vision—including the e-air waybill which is nearing 50% market penetration.”

Brighter future

Giving his commentary on the IATA’s latest data, Ignazio Coraci noted: “The global economy is starting to recover from a rocky 2016, benefiting the worldwide air cargo industry and boosting demand during February 2017. With cross-border e-commerce, an increasing lucrative market for air cargo, set to grow rapidly over the next five years, the future is looking brighter and brighter for the industry.”

Freight Rises Across Europe’s Airports in February 2017

New figures show that the volume of freight passing through Europe’s airports increased in February, suggesting that the continent’s air cargo market is stronger than ever. Ignazio Coraci comments.

Rich markets

Europe is one of the richest regions on earth, with some of the biggest economies in the world including the UK, France and Germany. The continent’s wealth and hungry consumer markets, coupled with the rise of e-commerce, have made Europe an increasingly lucrative place for air cargo firms.

We are seeing Europe’s airports thrive within this environment, as air cargo firms transport goods through these pivotal gateways in ever-increasing numbers. Just look at Heathrow airport, the primary gateway for the UK’s booming capital London, as an example. Last year, the expansion rate of cargo which passed through Heathrow outpaced its passenger growth, showing that business is booming.

High growth

According to Air Cargo Week, an industry portal, Europe’s airports kept recording growth early into 2017, as their freight traffic ticked up by 3.4% of February this year. The best performer for February was Frankfurt airport, as the gateway saw its air cargo volumes expand by 2.2%, hitting 153,870 tonnes, in February, while in the first two months of the year, its air freight growth came in a 4.2%.

These figures were released by sector body the Airports Council International (ACI) Europe, who also noted that Heathrow performed well during the first two months of the year, recording respectable air freight growth of 4.2%, meaning that 251,212 tonnes passed through Heathrow in this period. Also Heathrow themselves have announced that their freight volumes grew by 4% in February 2017, contrasting slightly with ACI Europe’s figure for the airport’s February expansion, which was 4.4%.

What was interesting was that ACI Europe recorded stronger progress in non-EU, than EU airports. According to the body, non-EU airports experienced 4.7% air cargo growth during February, while EU airports racked up 2.7% in air freight expansion. Meanwhile, the air cargo growth rate for all of Europe was 5.4% in the opening two months of this year, with the expansion rate coming in at 9.1% and 4.8% for non-EU and EU airports.

Major progress  

Commenting on the release of ACI Europe’s latest figures, Ignazio Coraci said: “It is apparent that 2017 got off to a great start for the airports of Europe, with their air cargo volumes expanding, in year-on-year terms, fairly significantly. It is clear that as the dust settles from an eventful 2016, and consumers buy goods in ever-greater numbers online, the European air cargo sector has benefitted, suggesting the coming year could be a positive one for one of the world’s most lucrative air cargo sectors.”

Improving Global Economy Benefits Air Cargo Sector

New figures indicate that throughout the first two months of 2017, the global air cargo sector rode the “wave of an improving world economy” to record strong growth. Ignazio Coraci comments.

Revised fortunes  

The global economy underperformed in 2016, due to shock events such as Brexit, but things picked up towards the end of the year. This was reflected by figures released by Absolute Strategy Research, which showed that “there is a reported pick-up in airfreight confidence,” which can be ascribed to increasing carrier efficiency and rising e-commerce volumes, which create new business for the sector.

Experts also recently suggested that the current economic environment has benefitted air cargo. This was recently illustrated by the semiconductor sector, which is seen as an indicator of what’s happening in air cargo. In January 2017, semiconductor industry sales climbed by 13.9%, hitting US$30.6 billion, on a year-on-year (YoY) basis, suggesting that the air cargo market has been boosted as a result.

Expanding volumes

WorldACD logoThis trend has been confirmed by analyst WorldACD’s latest market update, which showed that the recovering economy is boosting the air freight industry. WorldACD found that in weight terms, global demand for air cargo ticked up by 6.3%, YoY, from January to February 2017. The firm said that after Chinese New Year, a traditionally weak period for air cargo, demand rose straight away.

Urging caution, WorldACD was quoted by Air Cargo News, an industry portal, saying: “Are these signs a harbinger of good times to come? Air cargo seems to ride the wave of an improving world economy, making for a good outlook for this year. Yet, we should caution against expectations of the present YoY growth percentages continuing. After all, the impressive growth percentages of the past half year were possible because of the relative weakness in the equivalent period one year earlier.”

Findings breakdown

WorldACD also broke their findings down along regional lines. During the opening two months of this year, air cargo demand expanded most rapidly in the Asia Pacific (+11%), North America (+7%) and Europe (+6.5%). WorldACD also discovered that in this time, global air cargo yield dropped by 5.9%, in dollar terms, when contrasted with the same value recorded between November and December 2016.

Expanding, WorldACD continued: “Viewing January/February 2017 against January/February 2016, we see a yield drop of 2.6% in US dollar-terms, but a 0.6 % yield rise, when measured in euros… So, the good news is that January/February revenues increased YoY. However, seen against the backdrop of jet fuel prices rising strongly YoY, margins for airlines continued to be fragile.”

Amazing progress

Commenting, Ignazio Coraci said: “It is becoming increasingly clear that a stabilising global economy is benefiting the worldwide air cargo sector, as demand surged in the first two months of 2017. Demand was particularly strong in powerful consumer markets, for example the US, a nation which is set for major-long-term growth in the air freight segment, due to strong economic fundamentals and rising e-commerce activity. The global air cargo sector, therefore, holds incredible potential, as more people are now buying goods online, and the resurging economy is helping the sector to tap it.”

GCC Set For Strong E-Commerce Growth

The Gulf-Cooperation Council (GCC) region, which includes all the Persian Gulf Arab states except Iran, is a profitable market for the global air cargo sector. New reports indicate that the region could become more lucrative, as the GCC is set to record strong e-commerce growth in the next few years.

Lucrative region

Ignazio coraci looks at Gulf-Co-Operation Council (GCC) regionThe GCC possesses a thriving collective economy, which according to EY – a banking sector specialist, could become the sixth biggest economy on earth by 2030. The region, therefore, has high rates of consumer spending, for example people in the GCC spent US$9.3 billion on beauty and personal care products alone in 2016, a rise of 10% from the year before. This is proving beneficial for air cargo.

As internet coverage rises in the GCC, more consumers are choosing to buy products online. This has provided new business for carriers, as they can supply the speedy product transport services, which many people have come to expect in the digital age. The GCC’s air freight sector is a US$7 billion market and the Middle East, which includes the GCC, saw its air freight volumes keep growing in 2016.

E-commerce growth   

It looks as though the GCC’s air cargo market will record further growth in future, as a new report from consulting firm A.T Kearney argues that the region could become the fastest expanding e-commerce market on earth. According to Freight Week, an industry portal, in 2015 online shopping contributed US$5.3 billion (0.2 of its gross domestic product), to the GCC’s economy. But A.T Kearney forecasts that this contribution will increase almost fourfold, to a massive US$20 billion, in the period to 2020.

Commenting, A.T. Kearney Partner Laurent Viviez said: “We expect the growth of e-commerce in the GCC to transform the future of businesses, economics and lives across the region – but only with the right set of enablers in place… And it doesn’t rule out traditional retailers, who can be on the winning side of e-commerce by adopting an omni-channel approach. We see the future for the sector as not digital-only but ‘physical with digital’ – traditional retailers can really tap into this.”

Serious potential

Speaking out on this research, Ignazio Coraci commented: “At ASC Cargo, of which I am CEO, we perform cargo and ground handling services for GCC-based carriers, such as Kuwait Airlines. We have seen first-hand how the rise of e-commerce has boosted the region’s air freight sector, as consumers increasingly choose to buy goods online, generating more business for carriers in the GCC region.

“It is clear, therefore, that if A.T. Kearney’s forecasts prove accurate, and the GCC’s ecommerce sector expands to US$20 billion by 2020, air freight firms could benefit from the additional income generated. Also, air cargo’s fortunes could be boosted further, by Amazon’s recent decision to buy Souq.com, the largest online marketplace in the Arab world. With Amazon’s technological investment and expertise, Souq.com will be able to improve their services, making it easier for GCC consumers to purchase goods online, and creating more business for air cargo, so the future is looking bright for the sector.”